Decentralized finance (DeFi) is one of the most critical use cases of blockchain technology. Despite the dramatic decline that has left the total value locked (TVL) in DeFi at about 20% of its peak ($248.8 billion in November 2021 compared to $48.6 billion in April 2023), the trend is here to stay and has the potential to recover in the coming years. The main argument for DeFi’s continued growth concerns the unmatched benefits of having financial services built on decentralized infrastructures.
As DeFi continues to evolve, crypto holders have access to many yield-generating opportunities. For example, decentralized exchanges (DEXs) reward liquidity providers (LPs) from the fees generated on their platforms. There are also other investment options like lending, staking or yield farming.
However, it is more difficult for retail investors to explore all these options. To begin with, investing in digital assets is a risky endeavor due to their high volatility. On top of that, providing liquidity on most large DEXs carries additional risks, such as impermanent loss.
Impermanent loss is a situation in which the value of the tokens deposited in liquidity pools turns out to be lower than if the tokens were simply held. This risk is inherent to most DEXs employing the automated market maker (AMM) model.
In fact, a study showed that around half the liquidity providers on Uniswap, the largest DEX by trading volume, can eventually lose money due to impermanent loss.
Access to systematic strategies levels the playing field
To make the most of DeFi, crypto users need to implement sophisticated strategies and treat yield farming as a professional asset management business rather than a get-rich-quick scheme. Professional fund managers have the best chances of winning in DeFi because they implement complex strategies, leveraging advanced financial engineering and quantitative models.
However, even these professionals may struggle, as DeFi asset management requires additional experience in on-chain logistics. Without the help of blockchain developers to individually connect each protocol on different chains, quant traders will struggle to scale their strategies and capture potential profits.
At present, there is a lack of dedicated platforms that provide this on-chain trading infrastructure, facilitating closer connections between retail crypto users and professional digital-asset managers. As a result, users and investors often navigate the complex world of DeFi on their own, manually participating in yield-farming schemes without the support of systematic strategies. Due to the lack of a systematic approach, this manual process may result in losses rather than gains.
This DeFi platform offers automated asset management
Range Protocol is an all-in-one on-chain asset management platform and ecosystem. It connects DeFi users with skilled vault managers, who use advanced quantitative strategies to make near-instantaneous adjustments by changing market conditions. These managers create noncustodial portfolios tailored to different asset strategies and risk tolerances. This approach ensures that systematic trading strategies are accessible while users retain complete control over their funds.
Source: Range Protocol
In addition, professional fund managers who choose to use Range will gain benefits such as expanded reach, reduced costs and improved returns through strategic leverage and fungible liquidity providers (LP) tokens with more excellent utility.
Professionally managed vaults
Range’s first product release is its Concentrated Liquidity AMM Vaults, which provides automated vaults that enable users to systematically deploy liquidity on concentrated liquidity-based DEXs such as Uniswap V3, PancakeSwap V3 and QuickSwap V3. These vaults enhance LP returns through optimized liquidity ranges, quick adjustments to changing market conditions, and just-in-time (JIT) liquidity rebalancing. Vault managers perform backtesting to determine profitable pricing ranges upon which to provide liquidity, enabling capital-efficient liquidity provision and enhanced returns. Their quantitative models quickly adapt to volatile or trending markets, while JIT liquidity rebalancing allows real-time adjustments as pricing bandwidths shift, thereby maximizing returns and minimizing rebalancing fees.
Source: Range Protocol
Range vaults allow users to deploy their assets into customized strategies that match their risk preferences, all while avoiding custodial risks. These vault strategies are managed off-chain to leverage extensive data for financial engineering modeling. Although the calculations occur off-chain, they are executed on-chain in real-time, allowing for swift adjustments in response to market changes.
Range Protocol plans to purpose-build vaults for various DeFi segments, including liquidity provisioning on concentrated liquidity AMMs, NFT Finance, liquid staking and derivative markets such as options and perpetual swaps. Specific strategies are deployed within each category based on asset liquidity and user risk tolerance.
Benefits for retail investors and professional asset managers alike
Addressing the needs and expectations of all stakeholders, Range paves the way for active asset management by providing a trustless trading infrastructure that caters to the needs of retail users and asset managers. It delivers capital efficiency and automation while ensuring asset safety and diversification, offering the following benefits.
- Asset safety — crypto assets are securely stored on-chain in noncustodial vaults, allowing for withdrawals at any time.
- Product diversity — Range supports various assets and provides multiple strategies for each token, ensuring a diverse investment portfolio.
- Full automation — Range’s vaults are managed by fully automated systematic strategies, eliminating the need for manual intervention.
For asset managers and quant-trading shops:
- Funding — asset managers can quickly scale their strategies on Range, facilitating growth and expansion.
- Development — Range protocol provides the infrastructure to perform interactions efficiently, abstracting away on-chain logistics for vault managers.
The team behind Range Protocol has broad experience in market-making activities for over 200 projects and over-the-counter trading operations. Quantitative research is one of the core elements of the platform’s functions, and the team plans to apply its proprietary research to Range Protocol’s strategies.
Source: Range Protocol
Range aims to expand further to integrate other DeFi segments. The DEX liquidity management vaults begin a broader ecosystem that includes nonfungible tokens (NFTs), liquid staking tokens and derivatives.
Thanks to Range, the DeFi market now has an on-chain, noncustodial quant trading infrastructure that offers active asset management and meets the expectations of both retail crypto users and dedicated asset managers.
Learn more about Range Protocol
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